World Bank’s IFC gives $75m debt financing to Yemeni food group

Yemeni women carry malnourished children as they wait at a clinic in the war-ravaged western province of Hodeida, on August 7, 2021. (AFP)
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Updated 11 August 2021

World Bank’s IFC gives $75m debt financing to Yemeni food group

  • Debt financing provided to Yemeni family conglomerate the Hayel Saeed Anam Group
  • HAS includes six food companies operating in the dairy, flour, and sugar sectors in Yemen

DUBAI: The International Finance Corporation (IFC) will provide up to $75 million in debt financing to a Yemeni food company as the war-torn country struggles with a growing hunger crisis and aid funding shortage, it said on Tuesday.
The IFC, the investment arm of the World Bank, is giving the assistance to multinational Yemeni family conglomerate the Hayel Saeed Anam Group (HAS), which includes six food companies operating in the dairy, flour, and sugar sectors in Yemen.
IFC said it is its first investment in Yemen’s agribusiness sector in more than 10 years.
Yemen’s deep economic crisis, shortage of foreign currency and impediments to food imports have seen prices skyrocket out of the reach of many.
A serious gap in funding for the Yemen aid response appeared last year, but more funds started flowing from March to April after UN officials said Yemen could see the world’s worst famine in decades.
“IFC’s financing package will help reduce food shortages and ensure supply chain sustainability, including the supply of staple foods to towns and villages across Yemen,” the corporation said.
The United Nations says the country is the world’s largest humanitarian crisis. Pockets of famine-like conditions re-appeared last year, the world body has said.
The United States on Monday said it would give $165 million in new humanitarian assistance to Yemen, hoping the move would encourage other donors to come forward with funds to address Yemen’s funding shortage.


New York Community Bank to buy failed Signature Bank

Updated 20 March 2023

New York Community Bank to buy failed Signature Bank

  • The 40 branches of Signature Bank will become Flagstar Bank. Flagstar is one of New York Community Bank’s subsidiaries
  • Signature Bank was the second bank to fail in this banking crisis, roughly 48 hours after the collapse of Silicon Valley Bank

NEW YORK: New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday.
The 40 branches of Signature Bank will become Flagstar Bank, starting Monday. Flagstar is one of New York Community Bank’s subsidiaries. The deal will include the purchase of $38.4 billion in Signature Bank’s assets, a little more than a third of Signature’s total when the bank failed a week ago.
The FDIC said $60 billion in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.
Signature Bank was the second bank to fail in this banking crisis, roughly 48 hours after the collapse of Silicon Valley Bank. Signature, based in New York, was a large commercial lender in the tristate area, but had in recent years gotten into cryptocurrencies as a potential growth business.
After Silicon Valley Bank failed, depositors became nervous about Signature Bank’s health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lending. By the time it was closed by regulators, Signature was the third largest bank failure in US history.
The FDIC says it expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion, but that figure may change as the regulator sells off assets. The deposit insurance fund is paid for by assessments on banks and taxpayers do not bear the direct cost when a bank fails.

Munjz takes pivotal step in its business model, secures $5 million in funding 

Updated 19 March 2023

Munjz takes pivotal step in its business model, secures $5 million in funding 

  • Company provides property management system for community managers

CAIRO: Saudi Arabia’s Munjz joins the property technology sector after taking a pivot that has changed the company’s mission and opened doors to new opportunities. 

Established in 2017, Munjz first started as a platform for homeowners to connect with certified home service providers but, by the end of 2021, the company took a pivotal step after the founder recognized that the property management sector holds a large opportunity as it is worth over $1.8 trillion globally. 

In an exclusive interview with Arab News, Abdullah AlDaij, CEO and founder of Munjz, said, “We pivoted our business model to be in the business-to-business sector and to classify our company as a proptech company seeing that around $25 billion were invested in the global proptech industry, which is around 27 percent from the global funding in 2021. Our vision is to digitalize vertical industry businesses by providing software and services at the same time.”

Capitalizing on the new trend, he decided to create a property management system software while incorporating the home services platform to bring the best of both worlds. 

The company provides a property management system for community managers to run everything from financial to operational functions through the software. In addition, managers also have access to the marketplace of service providers like house cleaning, maintenance and material supply, which can be utilized to better operate the business. 

Residents also have access to the home services marketplace that is white labeled under Munjz to also cater to its direct-to-consumer segment. 


$1.8 trillion

Munjz took a pivotal step after the founder recognized that the property management sector holds a large opportunity as it is worth over $1.8 trillion globally.

“We have three different customer segmentations,” AlDaij explained, “in residential, I’m talking about compounds, real estate, developers, community association, hospitality, and property managers.” 

“The second segment is commercial where we are targeting retailers, offices, food and beverage, warehouses, healthcare centers and education centers. The third segment is the service companies that are in our marketplace, we are talking about professional services, cleaning services, hospitality services and logistics,” he added. 

Through its new customer segmentation pivot, Munjz managed to open room for more revenue streams to support the business. 

Abdullah AlDaij, Munjz chief executive officer. (Supplied)

“We have three main revenue streams,” he explained. “The first is from the marketplace, from our service providers. We are capturing a commission base from every service closed.” 
“The second revenue stream is the subscription fee to access the platform and the third revenue stream is from the end user who is requesting a service from the property manager,” he continued, explaining that the third revenue stream is the company’s white label services that are provided to property managers to cover residential orders. 

As the company pivoted to its new model just seven months ago, AlDaij predicts to hit profitability in 18 to 24 months through expansion plans into the aforementioned segments. 

“We operate in 15 cities in the Kingdom. By the first quarter of next year, we will expand to Egypt and Abu Dhabi. Our shift is going to be more convenient for us for global expansion because now we are focusing on our software as a service solution,” AlDaij stated. 

He added that the company will only focus on the PMS software in its expansion plans because of its convenience.  

“Inside the Kingdom, we are strong enough in terms of the marketplace because we have already built this network for the last five years. So, we have more than 3,500 service providers that are working with us, and all these companies are now available to our B2B clients,” he stated. 

As the company expands, AlDaij stated that Munjz will go through a shortlisting process for its service providers to offer better experiences to its clients. 

The company currently has 79 business accounts that include “Dunkin Donuts, McDonald’s, DHL and one of the biggest development companies in Saudi Arabia called Almajdiah, which has more than 20,000 units under its umbrella,” AlDaij added. 

Moreover, he stated that the company is expected to reach 300 business clients by the end of this year. 

Last month, Munjz raised $5 million in a series A funding round led by undisclosed investors with participation from Vision Ventures, Almajdiah Investment Co. and Watheeq Proptech Fund. 

AlDaij shared that the company will utilize its funding in product development and technology as well as structuring Munjz. 

“Because our customers are different it means the company is different. Therefore, the structure and the team members should be taken into consideration to look after the talent who can run this new strategy. The investment is going to be mainly in structuring the team members and looking after the talents and engineers,” he stated. 

Munjz currently has 50 employees and will reach 85 staff members by the end of this year. 

AlDaij concluded by stating that the Saudi property management sector will grow significantly in the coming years, as it was worth $23 billion in 2021 and is projected to reach $35 billion by 2028. 

Riyadh Cables expects to maintain double-digit profit driven by giga projects

Updated 19 March 2023

Riyadh Cables expects to maintain double-digit profit driven by giga projects

  • Firm recorded impressive net profit of SR351.9 million for 2022, an increase of 46.6 percent over the previous year

RIYADH: In its first-ever public result after being listed on the Saudi Stock Exchange, Riyadh Cables Group Co. announced an impressive net profit of SR351.9 million ($93.84 million) for 2022, registering an increase of 46.6 percent over the previous year. 

The Riyadh-based firm recorded revenue growth of 40.3 percent to SR6.9 billion during the same period, while its sales volumes increased by 37.1 percent to 190 kilo tons.  

The robust performance prompted RCG’s board to propose dividends of SR225 million at SR 1.50 per share for the financial year 2022, in line with its previous guidance and subject to shareholders’ approval at the Annual General Meeting.  

In an exclusive interview with Arab News, the company’s CEO Borjan Sehovac, said: “Strong local and regional demand drove an increase in sales volumes, resulting in a boost to sales growth. Profitability was enhanced by successful SG&A (selling, general and administrative expenses) optimization measures and overall cost management.”  

Riyadh Cables Group Co. CEO Borjan Sehovac. (Supplied)

He went on to add that RCG’s ability to win a larger share of bids locally and regionally was due to its “stellar reputation which we built along the decades.”  

With strong activity expected to be sustained in RCG’s core Middle East markets, he said they anticipate substantial demand-led growth in revenue in 2023, remaining healthy in the range of 3 percent to 5 percent, “while capex of SR200-plus million is expected to support the strong order backlog.”  

The company expects its net profit to increase by a double-digit figure in the financial year 2023. 

Tadawul listing 

Founded in 1984, RCG got listed on Tadawul on Dec. 19, 2022, after successfully raising $378 million from an initial public offering.  

After a long and strong track record, in which the company has achieved a leadership position in its sector, Sehovac said the IPO was a “natural next step on our growth journey – increasing our profile, strengthening our institutionalization drive and positioning us for future expansion.”  

Sehovac calls 2022 a “historic year” for their business, not least for the successful debut of RCG on the Saudi Exchange, but for reporting significant growth in both sales volumes and revenues for the full-year 2022.

“The company’s strong sales, coupled with an unwavering focus on operational excellence and efficiency, have not only resulted in impressive profitability but also ensured sustainable long-term growth,” said the CEO.  

RCG is among the 18 companies or funds that offered parts of their shares through IPOs during last year as the Saudi Stock Exchange continues to drive market growth in the region.  

At the end of 2022, Tadawul had a total of 223 listed companies, with the total offered value reaching SR37.51 billion as 2.96 billion shares/units were offered for all IPOs.  

Sehovac said the Saudi capital market is the region’s largest, most liquid and most attractive market. 
“Backed by the ambitions of Saudi Vision 2030, the underlying evolution of the Kingdom is, and will always be reflected in its financial markets,” he said, adding that they are proud to be active participants in it. 

The Riyadh-based firm recorded revenue growth of 40.3 percent to sR6.9 billion in 2022, while its sales volumes increased by 37.1 percent to 190 kilo tons. (Supplied)

Growth prospects   

RCG, which serves customers in Saudi Arabia, the Gulf Cooperation Council and international markets, is bullish about the growth prospects of the cables industry.  

“All global trends and indicators confirm that the power cables market is expected to grow globally based on the ambitious development plans and major demand drivers, such as energy transition and digital transformation,” said RCG CEO.  

On a local level, he said the power cables market in the Kingdom is expected to grow at a compound annual growth rate of 8.3 percent between 2022 and 2027 to reach SR16.8 to SR18.7 billion, driven by giga/mega projects as well as industrial and housing development.  

“RCG, being the largest player in the region, is ideally positioned to benefit from this growth,” he affirmed. 

Expansion strategy 

The company owns and operates 15 cable and related materials manufacturing and testing facilities, extending over 1.5 million sq. m in Riyadh, Sharjah and Baghdad. Its manufacturing infrastructure is integrated across the value chain including six factories to manufacture raw materials used in the cables industry to support its own nine cables factories. 

“This makes us self-reliant while also improving our manufacturing efficiency by being able to control the cost and quality of our manufacturing materials,” Sehovac said.

Asked about its expansion plan, he replied the company will expand its footprint in due course, and “we’ll make announcements to the market at the appropriate time.” 

RCG has a vast regional distribution network and a production capacity of 264,000 tons per year. 

Sehovac said the company is continuously looking to increase its market share by focusing on increasing sales of its primary products in existing markets and expanding to neighboring markets.  

He clarified that the company doesn’t have any immediate plans to raise funding as “we are a well-funded business with a strong balance sheet and plenty of headroom to grow.”   

With regard to the supply chain — as the raw materials are mostly imported —how does the company ensure smooth supply amid the volatile pricing of metal and aluminum?   Sehovac insists that the company always strives to increase the percentage of local content in its manufacturing process. 

“In fact, RCG sources its needs of aluminum, lead, and polymers locally. The company buys its core manufacturing materials through long-term contracts,” he revealed, adding that they also use a well-engineered hedging mechanism to offset commodity price volatility risk and stability of profits. 

ESG goals 

Divulging about the company’s environmental, social and governance strategy, Sehovac said the company owns state-of-the-art recycling facilities for the reuse of recyclable metals, polymers and cable drums, contributing effectively to the sustainability processes.  

“ESG is at the heart of RCG’s strategy. We are committed to reducing waste and CO2 emissions,” he said, adding that they are amongst key suppliers of renewable energy projects, supporting the Kingdom’s plans for generating 58.7 gigawatts of renewable energy with locally manufactured products. 

The CEO called Vision 2030 as “a roadmap for its investment plans, and to be a key player in delivering the vision’s objectives.” 

“This is a fantastic opportunity for our business and one that we are fully capitalizing on,” he concluded.

Sovereign wealth funds driving M&A activity in Middle East

Updated 18 March 2023

Sovereign wealth funds driving M&A activity in Middle East

  • Saudi Arabia to witness 'more consolidation and local mergers and acquisitions,' predicts financial expert

The sovereign wealth funds in the Middle East are the driving forces behind mergers and acquisitions in the region, which witnessed the activity rise to about 39 percent in 2022, according to the regional head of private equity and sovereign wealth fund practices at Bain & Co.
In an interview with Arab News, Gregory Garnier said the rise in M&A activity in Saudi Arabia in particular and the Middle East region in general last year was the result of an “acceleration of a long-term trend started a few years back.”
The top official of the American management consulting firm also attributed the rise in M&A deals in the region to “high economic growth” providing “financial headroom to invest.”
In its recent report, the firm stated that sovereign wealth funds and companies accounted for 84 percent of all transactions, with private equity investors entering relatively few deals.
Garnier added: “For deals in the region, several positive factors have fueled that growth: increasing appetite from regional private owners to divest or welcome a strategic shareholder (sometimes as a step before the initial public offering, which is another underlying trend), privatization agenda of some countries of the region also offers some deal opportunities, and active scouting of local investors on deals.”
According to him, localization of international companies in the Gulf Cooperation Council countries requires several key success factors including “minimum demand to reach the minimum critical scale,” favorable regulations, and incentives to allow economic sustainability versus imports.
“Sovereign wealth funds can play a critical role in securing those key success factors by providing direct support as well as coordinating with the relevant government bodies,” said Garnier.

PE activity drops
Private equity activity in the region dropped by 36 percent in the first 10 months of 2022 though there are some signs of reviving interest from firms preparing for initial public offerings, the report stated.
“Private equity has been historically relatively underdeveloped in the region versus the rest of the world. Though there can be a form of competition on some local deals with sovereign wealth funds, this is also a source of deal stimulation on the market,” Garnier commented.


Rise in M&A deals in the region attributed to ‘high economic growth’ providing financial headroom to invest.’

Sovereign wealth funds and companies accounted for 84 percent of all transactions, with private equity investors entering relatively few deals.

Localization of international companies requires several key success factors including ‘minimum demand to reach the minimum critical scale,’ favorable regulations, and incentives to allow economic sustainability.

“We foresee increasing activity from private equity funds in the region, including from international private equity funds, attracted by the high growth prospects of the GCC economies.”
“This is driven by two main factors. Firstly, willingness to be closer to the regional sovereign wealth funds, which are major limited partners and fund providers to their international funds. Secondly, increasing incentives from regional sovereign funds to invest in the region,” he continued.
“We also see a trend from business owners to open the capital to private equity funds as a means to be IPO-ready, as IPOs have surged in the region over the past few years.”

Transforming economies
Sovereign wealth funds are employing M&A to expand into new verticals, including strengthening partnerships, making future investments, boosting the region, and developing local leaders.
Garnier highlighted how sovereign funds invest through different archetypes that consist of entering new verticals at scale by building local platforms in underdeveloped sectors, strengthening ties with partners, investing in industries of the future, increasing visibility, and building local leaders.
Saudi Arabia’s Public Investment Fund, for example, invested $1.3 billion in four Egyptian companies in August 2022, including Abu Qir Fertilizers and Alexandria Container and Cargo Handling.
“This corresponds to one of the archetypes of investment where GCC sovereign wealth funds invest in targeted neighboring countries with an objective to both make investments in attractive assets in large and growing economies to meet targeted countries’ need to privatize some of their assets and strengthen the bilateral ties,” Garnier explained.
This hyperactivity to expand and globalize opens opportunities for companies and financial sponsors both within and beyond the Middle East.
Furthermore, family-owned companies and conglomerates will have the opportunity to divest non-core assets and reallocate capital for long-term strategic investments in their core industries, according to the report.
In many situations, international M&A proves to be a more effective and faster way to develop new sectors versus developing them organically, Garnier said.
“International M&A allows access to critical capabilities in the related sector, and generally includes some localization plans in the home country,” he added. “This is particularly true for underdeveloped and edgy/technology-led sectors like pharmaceuticals, automotive, aerospace, etc.”
Meanwhile, regional companies are also expanding internationally through cross-border M&A or overseas investments. For example, Abu Dhabi’s FAB merged its Egyptian operations with Bank Audi Egypt, creating one of Egypt’s largest banks.

Different approach
Saudi Arabia is increasingly relying on M&A to further advance the region’s long-term push to expand beyond hydrocarbons and globalize its companies.
“We expect more consolidation and local M&A to occur in the Kingdom for example in financial services, in some industrial sectors, in private education, in real estate development,” he said.
Asked whether M&A in Saudi Arabia requires a different approach than what most dealmakers take in other parts of the world, Garnier replied: “M&A in the GCC presents a few specifics as the deals tend to take longer from origination to realization, patience is a key success factor for potential acquirers.”
“Also, M&A deals tend to be often minority stake with family owner keeping a majority stake, hence trust in the potential investor is key, deals are thus often non-competitive. However, the situation is evolving, and the trend is increasingly converging towards rest of the world norms,” he concluded.


Huawei has replaced thousands of US-banned parts in its products, founder says

Updated 18 March 2023

Huawei has replaced thousands of US-banned parts in its products, founder says

  • Since 2019, Huawei, a major supplier of equipment used in 5G telecommunications networks, has been the target of successive rounds of US export controls
  • Huawei invested $23.8 billion in R&D in 2022, says the company's founder, Ren Zhengfei

SAN FRANCISO/NEW YORK: Huawei Technologies Co. Ltd’s founder said that the company has replaced more than 13,000 parts in its products that were hit by US trade sanctions, according to a transcript of a speech posted on Friday by a Chinese university.
According to the transcript posted by Shanghai Jiao Tong University, Huawei founder Ren Zhengfei said Huawei had over the past three years replaced the 13,000 components with domestic Chinese substitutes and had redesigned 4,000 circuit boards for its products. He said production of circuit boards had “stabilized.”
The remarks, which Reuters could not independently verify, provided a window into Huawei’s efforts to bounce back from US trade restrictions. Since 2019, Huawei, a major supplier of equipment used in 5G telecommunications networks, has been the target of successive rounds of US export controls.
Those controls cut off both Huawei’s supply of chips from US companies and its access to US technology tools to design its own chips and have them manufactured by partners. The Biden administration last year also banned the sale of new Huawei equipment in the US.
Ren made the remarks in a talk to Chinese technology experts on Feb. 24, the university said. The university posted the transcript on its website on Friday. A US-based Huawei representative did not immediately respond to a request for comment on Friday.
Ren said Huawei invested $23.8 billion in R&D in 2022, and “as our profitability improves, we’ll continue to increase R&D spending.”
The reports come after analysts said that Huawei showed off 5G telecommunications equipment at an industry conference in Barcelona in which all of the chips on its circuit boards had their origins obscured.